By Ketki Saxena
Investing.com – Statistics Canada announced this morning that the Consumer Price index jumped to 8.1% year over year in June, following a 7.7% gain in May, and marking the largest yearly change since 1983.
On a monthly basis, the CPI rose 0.7% in June, following a 1.4% increase in May. On a seasonally adjusted monthly basis, the CPI was up 0.6%.
Price increases remained broad-based with seven of eight major components rising by 3% or more, with the greatest acceleration due to the higher price of gasoline. On a year-over-year basis, consumers paid 54.6% more for gasoline in June, following a 48.0% increase in May.
The consumer price index rose significantly faster than hourly wages, which increased 5.2% in the 12 months to June - meaning that on average, Canadians are getting poorer.
The one silver lining is that the red-hot inflation data was slightly lower than the price increase expected by economists, who had forecast a jump to 8.3%.
However, inflation remains at a fresh 40 year high, raising the case for yet another 100 bps move from the Bank of Canada in September as it seeks to forcefully tackle out-of-control inflation, even if it means risking a recession.
On July 13, Canada's central bank shocked markets with an all in, 100 bps hike, raising the benchmark rate a full percentage point to 2.5%. The Bank of Canada has raised its key overnight lending rate four times this year in an attempt to control inflation, with analysts expecting rates to be above 3% at year end.